24 April 2018 INTERIM REPORT JANUARY MARCH 2018 Reporting period January March Net sales increased by 10.4 per cent to SEK 2,674 (2,423) million. Organically, net sales decreased by 0.6 per cent EBITA* increased by 8.6 per cent to SEK 418 (385) million The EBITA margin* amounted to 15.6 (15.9) per cent Earnings before tax grew by 3.9 per cent to SEK 346 (333) million Net profit for the period grew by 3.6 per cent to SEK 259 (250) million Earnings per share increased by 3.7 per cent to SEK 2.82 (2.72) Cash flow from operating activities was SEK 31 (136) million During the period, Lifco acquired two businesses with total annual sales of around SEK 97 million During the period, SEK 1,750 million in bonds were issued to refinance existing bank loans and bonds Summary of financial performance FIRST QUARTER Rolling 12 months FULL YEAR SEK million 2018 change change Net sales 2,674 2,423 10.4% 10,281 2.5% 10,030 EBITA* 418 385 8.6% 1,765 1.9% 1,732 EBITA margin* 15.6% 15.9% -0.3 17.2% -0.1 17.3% Profit before tax 346 333 3.9% 1,486 0.9% 1,473 Net profit for the period 259 250 3.6% 1,116 0.8% 1,107 Earnings per share 2.82 2.72 3.7% 12.04 0.8% 11.94 Return on capital employed 19.4% 19.2% 0.2 19.4% -0.3 19.7% Return on capital employed excl. goodwill 182% 146% 36 182% 5 177% * Before acquisition costs.
COMMENTS FROM THE CEO The three-month period saw generally good demand in all three business areas. However, in many of our manufacturing units we were affected by increased delivery times and delays among our subcontractors. Coupled with bottlenecks in production, this led to lower organic growth and more cash being tied up in inventories. Net sales increased by 10.4 per cent to SEK 2,476 (2,423) million in the quarter, driven mainly by acquisitions. Cash flow from operating activities for the period was SEK 31 (136) million, mainly due to the increase in cash tied up in inventories. EBITA before acquisition costs increased by 8.6 per cent to SEK 418 (385) during the period while the EBITA margin declined to 15.6 (15.9) per cent as a result of a weak performance in Demolition & Tools. Earnings per share increased in the quarter by 3.7 per cent to SEK 2.82 (2.72). In the quarter, Lifco consolidated two new businesses with combined annual sales of around SEK 97 million. The consolidated companies were a majority stake in Computer konkret, a German software company, and Spocs, a Swedish provider of final assembly and testing services for electronic products. Both acquisitions had together a positive impact on Lifco s earnings and financial position in the first quarter. During the period, we also issued two unsecured bond loans of SEK 1,750 million in total with a tenor of two years. The proceeds of the bond issues were used to refinance existing bank loans and bonds. The bonds generated strong investor interest and the issues were oversubscribed. Lifco has a good financial position and ample financial scope for further acquisitions, as net debt stands at 2.0 times EBITDA before acquisition costs, still well below our target of a net debt of up to three times EBITDA. Fredrik Karlsson CEO 2
GROUP PERFORMANCE IN JANUARY MARCH Net sales increased by 10.4 per cent to SEK 2,674 (2,423) million, driven by acquisitions and foreign exchange gains. Acquisitions added 9.7 per cent while foreign exchange gains had a positive impact of 1.3 per cent. Organic growth was -0.6 per cent. During the period, Spocs of Sweden and Lifco s majority stake in Computer konkret of Germany were consolidated. EBITA* increased by 8.6 per cent to SEK 418 (385) million, driven by acquisitions and foreign exchange gains. Foreign exchange gains accounted for 1.4 percentage points of the increase in EBITA*. The EBITA margin* decreased by 0.3 percentage points to 15.6 (15.9) per cent. During the period, 37 per cent of EBITA* was generated in EUR, 28 per cent in SEK, 14 per cent in NOK, 7 per cent in DKK, 6 per cent in USD, 2 per cent in GBP and 6 per cent in other currencies. Net financial items were SEK -13 (-9) million. The profit before tax increased by 3.9 per cent to SEK 346 (333) million and the net profit for the period increased by 3.6 per cent to SEK 259 (250) million. Average capital employed excluding goodwill decreased by SEK 12 million over the three-month period, to SEK 968 million at 31 March 2018, compared with SEK 980 million at 31 December. EBITA* in relation to average capital employed excluding goodwill was 177 per cent at year-end and increased to 182 (146) per cent over the period. The Group s net interest-bearing debt increased by SEK 160 million from 31 December to SEK 3,696 million at 31 March 2018. During the period, Lifco issued two unsecured bond loans of SEK 1,750 million in total with a tenor of two years. The proceeds of the bond issues were used to refinance existing bank loans and bonds. The net debt to equity ratio at 31 March 2018 was 0.6 (0.7) and net debt to EBITDA* was 2.0 (2.1) times. At the end of the period, 32 per cent of the Group s interest-bearing liabilities were denominated in EUR. Cash flow from operating activities decreased to SEK 31 (136) million during the period, mainly due to an increase in cash tied up in inventories. Cash flow from investing activities was SEK -107 (-562) million, which was mainly attributable to acquisitions. 3
FINANCIAL PERFORMANCE BUSINESS AREAS Dental Rolling 12 FULL FIRST QUARTER months YEAR SEK million 2018 change change Net sales 1,010 1,000 1.0% 3,827 0.3% 3,817 EBITA* 191 185 3.2% 707 0.9% 701 EBITA margin* 18.9% 18.5% 0.4 18.5% 0.1 18.4% The companies in Lifco s Dental business area are leading suppliers of consumables, equipment and technical service to dentists across Europe, and the business area also has operations in the US. Lifco sells dental technology to dentists in the Nordic countries and Germany, and develops and sells medical record systems in Denmark and Sweden. The business area also includes a number of manufacturers which produce disinfectants, saliva ejectors, bite registration and dental impression materials, bonding agents and other consumables that are sold to dentists through distributors around the world. Net sales in Dental increased by 1.0 per cent to SEK 1,010 (1,000) million in the first three months of the year. EBITA* increased by 3.2 per cent to SEK 191 (185) million during the period and the EBITA margin* expanded by 0.4 percentage points to 18.9 (18.5) per cent. The dental market remains generally stable. The results of individual companies in Lifco s Dental business may in any individual quarter be influenced by significant fluctuations in exchange rates, calendar effects such as Easter, gained or lost contracts in procurements of consumables by publicsector or major private-sector customers and fluctuations in the delivery of equipment. In the first quarter of 2018, the early Easter had a slight negative impact on net sales and earnings in Dental. Lifco s majority stake in Computer konkret, a German software provider to dentists and orthodontists, was consolidated as of January 2018. The company had net sales of around SEK 36 million in and has around 50 employees. 4
Demolition & Tools Rolling 12 FULL FIRST QUARTER months YEAR SEK million 2018 change change Net sales 597 479 24.6% 2,379 5.2% 2,261 EBITA* 117 111 5.4% 604 1.0% 598 EBITA margin* 19.6% 23.2% -3.6 25.4% -1.1 26.5% Demolition & Tools develops, manufactures and sells equipment for the construction and demolition industries. The Group is the world s leading supplier of demolition robots and crane attachments. The Group is also one of the leading global suppliers of excavator attachments. The operations are divided into two divisions, Demolition Robots and Crane & Excavator Attachments, which are of roughly equal size in terms of sales. Net sales increased by 24.6 per cent over the period to SEK 597 (479) million. The market situation was generally good. Among the larger markets, the US, Australia, France and Germany saw the fastest growth. EBITA* increased by 5.4 per cent during the year to SEK 117 (111) million and the EBITA margin* decreased by 3.6 percentage points to 19.6 (23.2) per cent, mainly due to provisions for doubtful trade receivables. Changes in the product mix and a weaker dollar also had a negative impact on the margin. Systems Solutions Rolling 12 FULL FIRST QUARTER months YEAR SEK million 2018 change change Net sales 1,067 944 13.0% 4,075 3.1% 3,952 EBITA* 138 116 19.0% 559 4.1% 537 EBITA margin* 12.9% 12.3% 0.6 13.7% 0.1 13.6% Through its operating units, Systems Solutions operates in industries offering systems solutions. Systems Solutions is divided into five divisions: Construction Materials, Interiors for Service Vehicles, Contract Manufacturing, Environmental Technology and Forest. 5
Net sales in Systems Solutions increased by 13.0 per cent to SEK 1,067 (944) million during the period. All divisions increased their sales apart from Interiors for Service Vehicles, where sales were on a par with the year-before period, and Contract Manufacturing, which saw a decline in sales. EBITA* increased by 19.0 per cent to SEK 138 (116) million in the first three months of the year. All divisions except Contract Manufacturing improved their earnings during the period. The EBITA margin* expanded by 0.6 percentage points to 12.9 (12.3) per cent. Construction Materials reported good sales and earnings growth for the period as a result of acquisitions. Sales in Interiors for Service Vehicles were in line with the same quarter in with increased profitability. In Contract Manufacturing, sales and earnings for the period were down year on year due to delayed deliveries and the decision by a major customer to move its production to China. Spocs, a Swedish provider of final assembly and testing services for electronic products, was consolidated as of March 2018. The company had net sales of around SEK 61 million in and has 23 employees. Environmental Technology reported good sales and earnings growth for the period, mainly on the back of acquisitions. Forest reported good sales and earnings growth for the period. The projects which created problems in Forest in have now been concluded. This, coupled with strong demand, led to a good performance during the three-month period. ACQUISITIONS Lifco made the following acquisitions during the period: Consolidated from month Acquisitions Business area Net sales Employees January Computer konkret Dental SEK 36m 50 March Spocs Systems Solutions SEK 61m 23 Further information on acquisitions is provided on page 15. The figures for net sales and number of employees refer to estimated annual net sales and the number of employees at the acquisition date. Taken together, the acquisitions will have a positive impact on Lifco s results and financial position in the current year. 6
OTHER FINANCIAL INFORMATION Employees The average number of employees in the first quarter was 4,714 (3,669) and the number of employees at the end of the period was 4,736 (3,740). Acquisitions added 73 employees. Events after the end of the reporting period After the end of the reporting period the majority of Dental Direct of Norway and its Danish subsidiary 3D Dental have been consolidated in business area Dental. Net sales in the companies in 2016 amounted to about 95 MNOK and 25 MDKK respectively. The companies are distributors of dental products and have together about 20 employees. Related party transactions No significant transactions with related parties took place during the period. Risks and uncertainties The risk factors which have the biggest impact for Lifco are the competitive situation, structural changes in the market and general level of economic activity. Lifco is also exposed to financial risks, including currency risks, interest rate risks, credit and counterparty risks. The parent company is affected by the above risks and uncertainties in its capacity as owner of the subsidiary companies. For further information on Lifco s risks and risk management, see the annual report for. Accounting principles The Group s interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. In respect of the parent company, the report has been prepared in accordance with the Annual Accounts Act and Recommendation RFR 2 Financial Reporting for Legal Entities of the Swedish Financial Reporting Board. The accounting principles have been applied in accordance with those which are presented in the annual report for and should be read in conjunction with these. The Group has evaluated the effects of implementing IFRS 9 Financial Instruments, which became effective on 1 January 2018 and has established that the impact is marginal. No adjustments have therefore been made to the opening balances for 2018. IFRS 15 Revenue from Contracts with Customers became effective on 1 January 2018, and the effects of the standard in Lifco s subsidiaries have been assessed in a project that was initiated in 2016. No material differences compared with the previous standards have been identified, and no adjustments have therefore been made to the opening balances for 2018. IFRS 15 is being applied from 1 January 2018 and the disclosures in the interim report have been adapted in accordance with this new standard. The Group is currently evaluating the effects of introducing the IFRS 16 Leases standard, which will become effective on 1 January 2019. The Group does not currently intend to apply the standard prior to the effective date. This report has not been examined by the Company s auditors. 7
DECLARATION OF THE BOARD OF DIRECTORS The Board of Directors and Chief Executive Officer warrant and declare that this three-month report gives a true and fair view of the parent company s and Group s operations, financial positions and results, and that it describes significant risks and uncertainties faced by the parent company and the companies included in the Group. Enköping, 24 April 2018 Carl Bennet Chairman of the Board Gabriel Danielsson Director Ulrika Dellby Director Erik Gabrielson Director Ulf Grunander Director Anna Hallberg Director Annika Espander Jansson Director Fredrik Karlsson President and CEO, Director Annika Norlund Director, employee representative Johan Stern Vice Chairman Axel Wachtmeister Director Hans-Eric Wallin Director, employee representative FINANCIAL CALENDAR The report for the second quarter will be published on 18 July The report for the third quarter will be published on 25 October The year-end report for 2018 will be published on 6 February 2019 8
ANNUAL GENERAL MEETING 2018 The Annual General Meeting of Lifco AB will be held on Tuesday 24 April 2018, at 3 p.m. CET, at Epicenter, Mäster Samuelsgatan 36, Stockholm. FURTHER INFORMATION Media and investor relations: Åse Lindskog, ir@lifco.se, telephone +46 (0)730 24 48 72 TELECONFERENCE Media and analysts are welcome to call in to a teleconference, where CEO Fredrik Karlsson, CFO Therése Hoffman and Deputy CEO Per Waldemarson will present the interim report. The presentation is expected to take around 20 minutes, after which participants will be invited to ask questions. Time: Tuesday 24 April, 1 p.m. Link to the presentation: https://tv.streamfabriken.com/lifco-q1-2018 Telephone numbers: Sweden +46 8 566 426 62 UK +44 203 008 98 02 US +1 855 753 22 35 LIFCO IN BRIEF Lifco offers a safe haven for small and medium-sized businesses. Lifco s business concept is to acquire and develop market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. Lifco is guided by a clear philosophy centred on long-term growth, a focus on profitability and a strongly decentralised organisation. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. At year-end the Lifco Group consisted of 138 operating companies in 29 countries. In, Lifco reported EBITA of SEK 1,732 million on net sales of SEK 10.0 billion. The EBITA margin was 17.3 per cent. Read more at www.lifco.se This information constitutes information that Lifco AB is required to publish under the EU s Market Abuse Regulation. The information was submitted for publication through the aforementioned contact person on 24 April 2018, at 11:30 a.m. 9
CONDENSED CONSOLIDATED INCOME STATEMENT FIRST QUARTER FULL YEAR SEK million 2018 change Net sales 2,674 2,423 10.4% 10,030 Cost of goods sold -1,550-1,418 9.3% -5,766 Gross profit 1,124 1,005 11.8% 4,264 Selling expenses -310-258 20.2% -1,095 Administrative expenses -409-374 9.4% -1,525 Development costs -37-24 54.2% -105 Other income and expenses -9-7 28.6% -20 Operating profit 359 342 5.0% 1,519 Net financial items -13-9 44.4% -46 Profit before tax 346 333 3.9% 1,473 Tax -87-83 4.8% -366 Net profit for the period 259 250 3.6% 1,107 Profit attributable to: Parent company shareholders 256 248 3.2% 1,084 Non-controlling interests 3 2 50.0% 23 Earnings per share before and after dilution for the period, attributable to Parent company shareholders 2.82 2.72 3.7% 11.94 EBITA* 418 385 8.6% 1,732 Depreciation of tangible assets 30 26 15.4% 112 Amortisation of intangible assets 3 2 50.0% 11 Amortisation of intangible assets arising from acquisitions 57 41 39.0% 196 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FIRST QUARTER FULL YEAR SEK million 2018 change Net profit for the period 259 250 3.6% 1,107 Other comprehensive income Items which can later be reclassified to profit or loss: Hedge of net investment 20 10 100% 99 Translation differences Tax related to other comprehensive income Total comprehensive income for the period 197-4 -23-2 -956% 100% -59-22 472 235 101% 1,125 Comprehensive income attributable to: Parent company shareholders 467 233 100% 1,102 Non-controlling interests 5 2 150% 23 472 235 101% 1,125 10
SEGMENT OVERVIEW Lifco s operations are monitored and evaluated by the CEO and resources are allocated based on information from the three operating segments: Dental, Demolition & Tools and Systems Solutions. The defined quantitative limits have been exceeded only by Dental and Demolition & Tools. One further operating segment, Systems Solutions, is presented. This operating segment consists of a merger of those divisions which have similar economic characteristics and which do not individually meet the defined quantitative limits. These divisions are Construction Materials, Interiors for Service Vehicles, Contract Manufacturing, Environmental Technology and Forest. NET SALES TO EXTERNAL CUSTOMERS No sales are made between the segments. Rolling 12 FULL FIRST QUARTER months YEAR SEK million 2018 change change Dental 1,010 1,000 1.0% 3,827 0.3% 3,817 Demolition & Tools 597 479 24.6% 2,379 5.2% 2,261 Systems Solutions 1,067 944 13.0% 4,075 3.1% 3,952 Group 2,674 2,423 10.4% 10,281 2.5% 10,030 Net sales by type of income: FIRST QUARTER Rolling 12 months FULL YEAR SEK million 2018 change change Dental products 1,010 1,000 1.0% 3,827 0.3% 3,817 Machinery and tools 597 479 24.6% 2,379 5.2% 2,261 Construction materials 244 170 43.5% 878 9.2% 804 Interiors for service vehicles 136 141-3.5% 548-0.9% 553 Contract manufacturing 208 239-13.0% 870-3.4% 901 Environmental technology 315 288 9.4% 1,151 2.4% 1,124 Forest 164 106 54.7% 628 10.2% 570 Group 2,674 2,423 10.4% 10,281 2.5% 10,030 11
EBITA A breakdown of results by segment is made up to and including EBITA. EBITA is reconciled to profit before tax in accordance with the following table: Rolling 12 FULL FIRST QUARTER months YEAR SEK million 2018 change change Dental 191 185 3.2% 707 0.9% 701 Demolition & Tools 117 111 5.4% 604 1.0% 598 Systems Solutions 138 116 19.0% 559 4.1% 537 Central Group functions -28-27 3.7% -105 1.0% -104 EBITA before restructuring, integration and acquisition costs 418 385 8.6% 1,765 1.9% 1,732 Restructuring, integration and acquisition costs -2-2 - -17 - -17 EBITA 416 383 8.6% 1,748 1.9% 1,715 Amortisation of intangible assets arising on acquisition -57-41 39.0% -212 8.2% -196 Net financial items -13-9 44.4% -50 8.7% -46 Profit before tax 346 333 3.9% 1,486 0.9% 1,473 12
CONDENSED CONSOLIDATED BALANCE SHEET SEK million 31 Mar 2018 31 Mar 31 Dec ASSETS Intangible assets 8,606 7,265 8,288 Tangible fixed assets 576 511 550 Financial assets 151 112 130 Inventories 1,555 1,214 1,391 Accounts receivable - trade 1,497 1,222 1,274 Current receivables 274 293 254 Cash and cash equivalents 250 255 305 TOTAL ASSETS 12,909 10,872 12,192 EQUITY AND LIABILITIES Equity 6,011 4,988 5,546 Non-current interest-bearing liabilities incl. pension provisions 1,055 1,116 1,033 Other non-current liabilities and provisions 1,072 661 1,025 Current interest-bearing liabilities 2,891 2,568 2,808 Accounts payable - trade 673 595 557 Other current liabilities 1,207 944 1,223 TOTAL EQUITY AND LIABILITIES 12,909 10,872 12,192 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to parent company shareholders SEK million 31 Mar 2018 31 Mar 31 Dec Opening equity 5,496 4,712 4,712 Comprehensive income for the period 467 233 1,102 Dividend - - -318 Closing equity 5,963 4,945 5,496 Equity attributable to: Parent company shareholders 5,963 4,945 5,496 Non-controlling interests 48 43 50 6,011 4,988 5,546 13
CONDENSED CONSOLIDATED CASH FLOW STATEMENT FIRST QUARTER FULL YEAR SEK million 2018 Operating activities Operating profit 359 342 1,519 Non-cash items 90 69 318 Interest and financial items, net -13-9 -46 Tax paid -151-110 -368 Cash flow before changes in working capital 285 292 1,423 Changes in working capital Inventories -155-23 -124 Current receivables -198-188 -85 Current liabilities 99 55 112 Cash flow from operating activities 31 136 1,326 Business acquisitions and sales, net -66-515 -1,378 Net investment in tangible fixed assets -39-45 -137 Net investment in intangible assets -2-2 -9 Cash flow from investing activities -107-562 -1,524 Borrowings/repayment of borrowings, net 1 394 557 Dividends paid -7-5 -337 Cash flow from financing activities -6 389 220 Cash flow for the period -82-37 22 Cash and cash equivalents at beginning of period 305 293 293 Translation differences 27-1 -10 Cash and cash equivalents at end of period 250 255 305 14
ACQUISITIONS IN 2018 Two new businesses were consolidated during the year. The acquisitions comprised all shares of Spocs and a majority stake in Computer konkret. The purchase price allocation includes all acquisitions that were made in the first three months of the year. Purchase price allocations are preliminary until one year after the acquisition date. Acquisition-related expenses of SEK 2 million are included in administrative expenses in the consolidated income statement for the first three months of 2018. If the businesses had been consolidated from 1 January 2018, consolidated net sales would have increased by around SEK 15 million. The acquisitions would have had a positive impact on earnings if the companies had been consolidated from 1 January 2018. Acquired net assets Net assets, SEK million Carrying Value Fair value amount adjustment Trademarks, customer relationships, licences 4 46 50 Tangible assets 1 1 2 Inventories, trade and other receivables 29-29 Trade and other payables -27-15 -42 Cash and cash equivalents 3-3 Net assets 10 32 42 Goodwill - 44 44 Total net assets 10 76 86 Effect on cash flow, SEK million Consideration 86 Consideration not paid -17 Cash and cash equivalents in acquired companies -3 Total cash flow effect 66 15
FINANCIAL INSTRUMENTS SEK million CARRYING AMOUNT 31 Mar 31 Mar 2018 31 Mar 2018 FAIR VALUE 31 Mar Loans and receivables Accounts receivable - trade 1,497 1,222 1,497 1,222 Other non-current financial receivables 6 4 6 4 Cash and cash equivalents 250 255 250 255 Total 1,753 1,481 1,753 1,481 Liabilities at fair value through profit or loss Other liabilities 278 57 278 57 Other financial liabilities Interest-bearing borrowings 3,913 3,651 3,913 3,651 Accounts payable - trade 673 595 673 595 Total 4,864 4,303 4,864 4,303 Financial instruments at fair value are classified into different levels depending on how fair value is determined. All financial instruments at fair value in the Lifco Group have been classified as level 3, i.e. non-observable inputs. The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant. Other liabilities classified as financial instruments refer to mandatory put/call options related to non-controlling interests. KEY PERFORMANCE INDICATORS ROLLING TWELVE MONTHS TO 2018 31 MAR 31 DEC 31 MAR Net sales, SEK million 10,281 10,030 9,359 Change in net sales, % 2.5 11.6 4.1 EBITA*, SEK million 1,765 1,732 1,488 EBITA margin*, % 17.2 17.3 15.9 EBITDA*, SEK million 1,892 1,855 1,596 EBITDA margin, % 18.4 18.5 17.1 Capital employed, SEK million 9,110 8,787 7,744 Capital employed excl. goodwill and other intangible assets, SEK million 968 980 1,017 Return on capital employed, % 19.4 19.7 19.2 Return on capital employed excl. goodwill, % 182 177 146 Return on equity, % 20.7 21.5 21.5 Net interest-bearing debt, SEK million 3,696 3,536 3,429 Net debt/equity ratio 0.6 0.6 0.7 Net debt/ebitda* 2.0 1.9 2.1 Equity/assets ratio, % 46.6 45.5 45.9 Number of shares, thousand 90,843 90,843 90,843 Average number of employees 4,714 4,107 3,669 16
CONDENSED PARENT COMPANY INCOME STATEMENT FULL FIRST QUARTER YEAR SEK million 2018 Administrative expenses -33-34 -128 Other operating income* - - 89 Operating profit -33-34 -39 Net financial items** 44 329 683 Profit after financial items 11 295 644 Appropriations - - -41 Tax 6 1-10 Net profit for the period 17 296 593 * Invoicing of Group-wide services. ** Net financial items include SEK 39 (302) million in dividends received during the three-month period. CONDENSED PARENT COMPANY BALANCE SHEET SEK million ASSETS 31 Mar 2018 31 Mar Tangible fixed assets 0 0 Financial assets 4,335 3,988 Current receivables 3,817 3,701 Cash and cash equivalents 29 27 TOTAL ASSETS 8,181 7,716 EQUITY AND LIABILITIES Equity 2,759 2,729 Untaxed reserves 70 41 Provisions 1 - Non-current interest-bearing liabilities 1,022 1,078 Current interest-bearing liabilities 2,872 2,556 Current non-interest-bearing liabilities 1,457 1,312 TOTAL EQUITY AND LIABILITIES 8,181 7,716 Pledged assets - - Contingent liabilities 135 3 17
DEFINITIONS AND OBJECTIVE Return on equity Return on capital employed Return on capital employed excluding goodwill and other intangible assets EBITA EBITA margin EBITDA EBITDA margin Net debt/equity ratio Earnings per share Net interest-bearing debt Net profit for the period divided by average equity. EBIT before acquisition costs divided by capital employed. EBITA before acquisition costs divided by capital employed excluding goodwill and other intangible assets. EBITA is a measure which Lifco considers relevant for investors who wish to understand the earnings generated after investments in tangible and intangible assets requiring reinvestment but before investments in intangible assets attributable to acquisitions. Lifco defines earnings before interest, tax and amortisation (EBITA) as operating profit before amortisation and impairment of intangible assets arising from acquisitions. In its financial reports Lifco excludes acquisition costs. This is indicated by an asterisk. EBITA divided by net sales. EBITDA is a measure which Lifco considers relevant for investors who wish to understand the earnings generated before investments in fixed assets. Lifco defines earnings before interest, tax, depreciation and amortisation (EBITDA) as operating profit before depreciation, amortisation and impairment of tangible and intangible assets. In its financial reports Lifco excludes acquisition costs. This is indicated by an asterisk. EBITDA divided by net sales. Net interest-bearing debt divided by equity. Profit after tax attributable to parent company shareholders divided by average number of outstanding shares. Lifco uses the alternative KPI net interest-bearing debt. Lifco considers that this is a useful additional KPI which allows users of the financial reports to assess the Group s ability to pay dividends, make strategic investments and meet its financial obligations. Lifco defines the KPI as follows: current and non-current liabilities to credit institutions, bond loans and interest-bearing pension 18
provisions less estimated contingent consideration for acquisitions, and cash and cash equivalents. Equity/assets ratio Capital employed Capital employed excluding goodwill and other intangible assets Equity divided by total assets (balance sheet total). Capital employed is a measure which Lifco uses for calculating the return on capital employed and for measuring how efficient the Group is. Lifco considers that capital employed is useful in helping users of the financial reports to understand how the Group finances itself. Lifco defines capital employed as total assets less cash and cash equivalents, interest-bearing pension provisions and noninterest-bearing liabilities, calculated as the average of the last four quarters. Capital employed excluding goodwill and other intangible assets is a measure which Lifco uses for calculating the return on capital employed and for measuring how efficient the Group is. Lifco considers that capital employed excluding goodwill and other intangible assets is useful in helping users of the financial reports to understand the impact of goodwill and other intangible assets on that capital which requires a return. Lifco defines capital employed excluding goodwill and other intangible assets as total assets less cash and cash equivalents, interest-bearing pension provisions, non-interest-bearing liabilities, goodwill and other intangible assets, calculated as the average of the last four quarters. 19
RECONCILIATION OF ALTERNATIVE KEY PERFORMANCE INDICATORS The interim report presents alternative key performance indicators for assessing the Group s performance. The primary alternative KPIs presented in this interim report are EBITA, EBITDA, net debt and capital employed. Definitions of the alternative KPIs are presented on pages 18 19. EBITA compared with financial statements in accordance with IFRS SEK million 3 MTHS 2018 3 MTHS FULL YEAR Operating profit 359 342 1,519 Amortisation of intangible assets arising from acquisitions 57 41 196 EBITA 416 383 1,715 Restructuring, integration and acquisition costs 2 2 17 EBITA before acquisition costs 418 385 1,732 EBITDA compared with financial statements in accordance with IFRS SEK million 3 MTHS 2018 3 MTHS FULL YEAR Operating profit 359 342 1,519 Depreciation of tangible assets 30 26 112 Amortisation of intangible assets 3 2 11 Amortisation of intangible assets arising from acquisitions 57 41 196 EBITDA 449 411 1,838 Restructuring, integration and acquisition costs 2 2 17 EBITDA before acquisition costs 451 413 1,855 Net interest-bearing debt compared with financial statements in accordance with IFRS SEK million 31 Mar 2018 31 Mar 31 Dec Non-current interest-bearing liabilities incl. pension provisions 1,055 1,116 1,033 Current interest-bearing liabilities 2,891 2,568 2,808 Cash and cash equivalents -250-255 -305 Net interest-bearing debt 3,696 3,429 3,536 20
Capital employed and capital employed excluding goodwill and other intangible assets compared with financial statements in accordance with IFRS SEK million 31 Mar 2018 31 Dec 30 Sep 30 Jun Total assets 12,909 12,192 11,843 11,308 Cash and cash equivalents -250-305 -237-227 Interest-bearing pension provisions -33-36 -36-35 Non-interest-bearing liabilities -2,951-2,805-2,568-2,329 Capital employed 9,675 9,046 9,002 8,717 Goodwill and other intangible assets -8,606-8,288-8,017-7,656 Capital employed excluding goodwill and other intangible assets 1,069 758 985 1,061 Capital employed and capital employed excluding goodwill and other intangible assets calculated as the average of the last four quarters compared with financial statements in accordance with IFRS SEK million Average Q1 2018 Q4 Q3 Q2 Capital employed 9,110 9,675 9,046 9,002 8,717 Capital employed excluding goodwill and other intangible assets 968 1,069 758 985 1,061 Total EBITA* 1,765 418 510 404 433 Return on capital employed 19.4% Return on capital employed excl. goodwill and other intangible assets 182% 21